New OAC Online Seminar: John Conroy Intimations of the 'informal economy', 16th April to 28th April

The seminar opens on Monday 16th April and will be closed Saturday 28th April.

You can read the new Working Paper here (warning it's long, but very interesting and you can be selective).

This paper considers the idea of informality in market exchange, as introduced into the economic development literature by Keith Hart in the 1970s. In addition, it discusses three writers who may be considered forerunners. Each, to a greater or lesser degree, anticipated the idea of informal economic activity and described it in a particular historical period and place. They are the mid-Victorian journalist Henry Mayhew (London, c.1850) (cf. Swift 2011), the libertarian economist P. T. Bauer (British West Africa, c.1948) and the economic anthropologist R. F. Salisbury (colonial New Guinea, c.1952-1963).

John Conroy is an economist, not entirely unreconstructed although he still calls himself a ‘development economist’. He spent the 1970s in Papua New Guinea, finishing as Director of the PNG Institute of Applied Social and Economic Research. After six years in Indonesia, during the 1980s, he ran the Foundation for Development Cooperation through the 1990s, specialising in microfinance and ‘financial inclusion’. He abandoned that field in disgust after its invasion by private equity, and is now a visiting fellow at the Crawford School of Economics and Government at the Australian National University.

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Paul, you may be right that "catch-as-catch-can" is a sort of maximizing behavior.  But the conditions under which it occurs are not those imagined by perfect market models in which all economic actors have equal access to opportunities and the information required for rational choices. As any small business person can tell you (I am one myself), chasing business is like hunting and gathering. Opportunities pop up and quick decisions have to be made, normally with neither the time nor the information required to do more than go with whatever your gut tells you. Now I imagine a person whose gut is perpetually hungry trolling for a chance to make a buck in any one of a number of possible legal, shady or illegal ways. Carefully calculated maximizing behavior seems highly unlikely. 

Economists now have models that take into account asymmetries in access to market information. Behavioral economists know a lot about why people are constantly making what are, on reflection, irrational decisions. Psychologists who study decision making have developed ideas about what are called recognition-primed decisions, i.e., decisions made by grabbing the first mental model that seems to fit a situation and going with it until forced to give it up, then grabbing the next off the stack.....a process that makes the size of the stack (more experience=more models) and the ordering of the models in it of critical concern, since there may not be time to try out more than two or three alternatives and if the best model is number four or five it never gets considered. 

Research like this has opened up huge gaps between the conventional poles of the binary opposition, maximizing vs non-maximizing behavior. I am wondering how its results apply to informal economies like those that Hart, Mayhew, et. al. have described for us. 

John (McCreery) asks about my contention that there are ‘limited precedents for any fine-grained division of labour’ in a PNG informal sector. The reasons for this are, I believe, based on Melanesian social structure and the agricultural technology of their subsistence agriculture. In general, Melanesians lived in small acephalous groups lacking ascribed status distinctions and also lacking specialist occupational roles (while not denying that individuals might practice particular skills on a ‘part-time’ basis while working primarily to contribute to food supply).  Their agriculture depends on rain-fed root crops, in marked contrast to the irrigated ‘wet rice’ cultures of their neighbours in monsoon Asia, with their elaborate forms of political organization and status systems based on the control and management of water and the production of a surplus by that means. This makes possible an elaborate division of labour with artisans, priests, clerks and functionaries, musicians, etc. The comparative absence of specialized production roles in the pre-monetized Melanesian subsistence economy provides a poor foundation for the practice of occupational specialization in the introduced monetary economy.    

Paul has picked up John’s point about rational choice among poor people subject to constraints. I think that both John and Paul are visualizing situations of extreme constraint (among, say, some of the most pitiable of Mayhew’s street people). The neoclassical economic models always assume the actors are subject to constraint – otherwise you wouldn’t have the scarcity on which maximizing models are based. The economist’s response to the question would be that a model of rational choice between alternatives still applies, although we as external observers are likely to be appalled by both the choices which must be made, and the outcomes. This, I guess, is what Paul means by choice being ‘quite unevenly distributed’.

Paul has also commented on the issue of enumeration and how this was Mayhew’s strength. (In fact, as I recall, an early alternative name for the informal sector was the ‘unenumerated sector’, though this seems no longer to be used). Bauer would not have objected to Mayhew’s ‘political arithmetick’ since one of his themes was the inadequacy of colonial labour force data, which over-rode the ‘fine-grained’ mix of activities (what he called ‘occupational fluidity’) of West Africans in favour of classifying them simply as ‘farmers’. Salisbury was a  diligent ‘measurer’, cataloguing the labour activities of PNG ‘farmers’, showing how they actually spent a surprising amount of time providing services – especially after the introduction of steel tools released a lot of male labour-power. So I don’t think they, or Keith Hart either, would see the enumeration of the informal economy as undermining it. Mayhew wanted to show just how much his street people were contributing to the economy of London and Keith Hart (in the face of inadequate data sources) attempted at least to define and describe the flows of income between the formal and informal economies of Accra. I’m not sure that Keith saw the informal economy as ‘powering development’, however. He was agnostic on the subject of whether it was a positive or a negative contributor.



T Paul Cox said:

I think rational actor models could be applied -- catch-as-catch-can is a sort of maximising behaviour -- but I wonder how much explanatory power they have when choice is so constrained. I also suspect, as Mayhew illustrated well, that choice is quite unevenly distributed in many informal economies. Which is certainly at odds with an image of the freest of free markets.

On another point raised in the paper, I find it interesting how Mayhew really did do his best, modern sampling methods or no, to enumerate the informal trades he wrote about. (Not to mention his successor Charles Booth; I can't remember how much he got into the details of occupations, but I love his maps.) Did Bauer, Salisbury and Hart see this type of work as useful, futile, missing the point, or perhaps even actively dangerous to informal economies? If the informal sector powers development, and what defines the sector is a lack of precise state recognition, then enumeration could be the first step towards undermining it. Does Mayhew's political arithmetick have development value, or is it a little too political?

The economist’s response to the question would be that a model of rational choice between alternatives still applies, although we as external observers are likely to be appalled by both the choices which must be made, and the outcomes. 

This is, however, precisely what the research I mentioned at the end of my last message denies. The classical model fails because it is insensitive to both information asymmetries and time pressure that make rational choice as classically conceived impossible.

Also, I do not see these pressures as restricted to situations of extreme constraint, a problem for a sort of lumpenproletariat alone. Much of the work on recognition-primed decision making has been done with subjects including bond traders as well as fire fighters, tank commanders, and others thrown into situations where quick decisions have to be made and lack of time and bandwidth in the human brain preclude interest-maximization driven calculation of best possible outcomes. Also, as a person who runs a small business, I know what this research is talking about, not calculating a best solution but quickly finding one that is good enough to proceed, a process called satisficing.

John, thanks for the link to your Pacific Economic Policy bulletin paper, "The national policy for the informal economy in Papua New Guinea." I'll save my comments and questions concerning the contemporary PNG context for later in the seminar.

While reading your paper I was reminded of No Money on Our Skin, Marilyn Strathern's ethnography of unskilled migrants from Hagen living in Port Moresby in 1970-2. In Chapter 7 "Money: operator and trickster," she says

According to their own account it is money which brings Hagen migrants to Moresby in the first place; it is money which facilitates a recreation of a Hagen style of life in town, which enable them to maintain links with home and which is likely to be both the incentive to and the stumbling block against actually going back. These are not just economic matters. (1975: 300)

There's then a footnote which says that "It is not just that non-economic factors are important but that apparently 'economic' factors may have non-economic (for example, ideological) dimensions."

Furthermore, in Keith's reply he mentions Chris Gregory's work on how "gifts and commodities are combined effortlessly in PNG exchange practices." Strathern later takes up the distinction between gift and commodity economies as an organising trope in The Gender of the Gift, using the former to talk about Melanesian social forms and the later Euro-American ones. In doing so, she used the logic of the gift to describe a host of activities that are usually not seen as properly 'economic,' including kinship and ritual.

My question pertains to the relations that compose these concepts. The informal economy is defined largely in opposition to the formal one, giving positive dimensions to a negativity. Your paper offers three examples, in Victorian England, British West Africa and colonial New Guinea. What is the limit of the concept? To what extent does the 'informal economy' concept include non-economic activity? In other words, does it exclude some activity outside its purview? Perhaps everything potentially economic? A related question is how does the distinction between formal and informal economies relate, if at all, to the one between gift and commodity economies?

Alberto Corsín Jiménez and Rane Willerslev's "‘An anthropological concept of the concept’," on the work that concepts do in economic models, might also be of some relevance here.

John (McCreery), thank you for that. First, a clarification: my use of the term 'classical' refers to the economics of Adam Smith and his contemporaries, through to about the middle of the C19, while 'neoclassical' refers to the economics of the 'marginal revolution' from about 1870 (which is the continuing basis of 'neo-liberal' economic ideology). My concern in this paper is to examine the history of ideas about what we have learned to call the informal economy. Speculations about the future development of those ideas are of less immediate concern to me, although I suspect that diminishing returns may apply to the application of some of the theoretical constructs you mention – at least if we attempt to apply them to the particular case of ‘petty’ or ‘micro’ economic activity in today’s developing countries – however useful they may prove as a means of understanding the behaviour of bond traders.

Bauer (whose work I have chosen to illustrate the early application of economic theory to these phenomena) was concerned with simple propositions dating back to Adam Smith – that specialization is limited by the extent of the market, and that trade and exchange are vital to the process of extending it – which he saw as essential in the transition from subsistence to market exchange. From this he concluded that the role of the informal economy (which he saw primarily in terms of its trading activities) was to contribute to that process of extending the market. He was the first economist to regard these activities as worthy of serious attention and to suggest that they could be illuminated by the application of relatively simple economic reasoning. Many orthodox economists would probably be satisfied by a parsimonious explanation of the phenomena, such as Bauer offered. Hart has pointed out, however, the existence of discrepancies between orthodox economic theory and such real world activities, and regards his concept of the informal economy as a ‘remedial concept’ which helps to reconcile ‘concrete conditions’ with ‘the partial institutionalization of economies around the globe along capitalist or socialist lines’.

Hart’s ‘remedial concept’ helps us to recognize elements of ‘hybridity’ in economic behavior – the persistence of elements of traditional social behavior and the pursuit of goals determined by traditional values – and it does suggest a situation where ordinary maximization principles may not apply very well. Bauer would no doubt have recognized this phenomenon of hybridity but would regard it as sufficient for the economist to make allowance for such matters as ‘the effects of different systems of land tenure, or of family obligations, on agricultural productivity and the supply of labour in non-agricultural occupations’. Bauer regarded such issues as beyond the purview of neoclassical theory, which operated at a level of abstraction such that ‘the principal long-term determinants of income and growth, such as the factors underlying the growth of capital, the size of population, the attitude towards work, saving and risk-bearing, the quality of entrepreneurship and the extent of markets, were considered as institutional forces or as facts given, as data, to the [neo-classical] economist.’



John McCreery said:

The economist’s response to the question would be that a model of rational choice between alternatives still applies, although we as external observers are likely to be appalled by both the choices which must be made, and the outcomes. 

This is, however, precisely what the research I mentioned at the end of my last message denies. The classical model fails because it is insensitive to both information asymmetries and time pressure that make rational choice as classically conceived impossible.

Also, I do not see these pressures as restricted to situations of extreme constraint, a problem for a sort of lumpenproletariat alone. Much of the work on recognition-primed decision making has been done with subjects including bond traders as well as fire fighters, tank commanders, and others thrown into situations where quick decisions have to be made and lack of time and bandwidth in the human brain preclude interest-maximization driven calculation of best possible outcomes. Also, as a person who runs a small business, I know what this research is talking about, not calculating a best solution but quickly finding one that is good enough to proceed, a process called satisficing.

What interests me here is how "hybridity" is conceived, as a mixture of traditional and modern. How does hybridity in this sense overlap with the catch-as-catch-can situation that Hart describes, in which people hustling to survive in the absence of stable employment do not enjoy the luxury (or endure the boredom) of specialization in repetitive tasks? 

One wonders, too, if some hybrids aren't more hardy than others. I think, for example, of huiguan, associations of people from particular regions or localities that appear in Chinese historical records during the Ming Dynasty and were created provide mutual support for candidates from outlying parts of China who had come to the capital to take the imperial examinations but came to play a huge role in Chinatowns throughout the overseas Chinese diaspora. On the one hand, they made it possible for new immigrants to find compatriots, employment, familiar food and lodging, and enjoy a measure of protection from authorities and other threats in the places to which they immigrated, while at the same time exposing new immigrants to exploitation by those who headed the associations. Do different local or ethnic groups in the PNG form similar associations? If not, why not?

Chinatowns also suggest another set of questions having to do with fluid employment and specialized skills. In a history of Yokohama's Chinatown I read about the importance of the "three knives," or more precisely three sets of edged tools knowledge of which equipped Chinese immigrants for employment as chefs, barbers or carpenters. What might ask to what degree, in an ethnically mixed informal economy, certain skill sets are associated with particular populations. Do we see anything like this in the PNG?

Justin, you were too well-mannered to mention that Strathern’s footnote included her rebuke, delivered to me for accepting ‘ideological’ expressions of an economic rationale for migration as evidence of cause and effect – and thus displaying the naiveté of the economist straying onto anthropological turf. If an ideology is what people tell themselves and others about the reasons for their behavior then I accept that observers who fail to dig down far enough may be misled into facile generalization.

But I should add that Marilyn Strathern found almost no evidence of informal economic activity among her group of unskilled Melpa migrants in Port Moresby in the early ‘70s, almost all of whom were in formal employment or looking for it. Much of the money they earned in the town was used to maintain or re-create traditional (rural) patterns of gift-exchange in the urban setting, both to maintain strong connections with the village by entertaining visitors and also to strengthen bonds with fellow Melpa townsmen whose support was crucial during periods of open urban unemployment.

I haven’t read Strathern on The Gender of The Gift, but I have read Gregory and I note that Hann and Hart (Economic Anthropology, 2011) maintain that Gregory ‘never meant the logical contrast [between gift and commodity] to stand for ethnographic separation of whole societies [eg, Melanesia and Euro-America]’. They also noted that (as you mention) Gregory ‘emphasized their practical combination in Papua New Guinea’. If ‘non-economic activity’ includes mechanisms of mutual support, such as those described by Strathern for Port Moresby and by Hart for the Accra suburb of Nima, then they are integral to the operation of an urban informal economy such as that of Nima. They may be wrapped in an ‘ideology’ of traditional reciprocity but they serve a new and intensely practical purpose in the non-traditional setting.  

Finally, I confess to being stumped by the question ‘whether the distinction between formal and informal economies relates, if at all, to the one between gift and commodity economies?’ I suspect there is no connection, but await other opinions. But I will comment on your statement that ‘the informal economy is defined largely in opposition to the formal one, giving positive dimensions to a negativity’. The same could be said for the concept of ‘unemployment’, as used by economists. Yet much that was positive has come out of Hart’s sceptical examination of un-employment in the context of development. The 'negativity' known as unemployment includes a rather large subset, also a negativity, called the informal sector.



Justin Shaffner said:

John, thanks for the link to your Pacific Economic Policy bulletin paper, "The national policy for the informal economy in Papua New Guinea." I'll save my comments and questions concerning the contemporary PNG context for later in the seminar.

While reading your paper I was reminded of No Money on Our Skin, Marilyn Strathern's ethnography of unskilled migrants from Hagen living in Port Moresby in 1970-2. In Chapter 7 "Money: operator and trickster," she says

According to their own account it is money which brings Hagen migrants to Moresby in the first place; it is money which facilitates a recreation of a Hagen style of life in town, which enable them to maintain links with home and which is likely to be both the incentive to and the stumbling block against actually going back. These are not just economic matters. (1975: 300)

There's then a footnote which says that "It is not just that non-economic factors are important but that apparently 'economic' factors may have non-economic (for example, ideological) dimensions."

Furthermore, in Keith's reply he mentions Chris Gregory's work on how "gifts and commodities are combined effortlessly in PNG exchange practices." Strathern later takes up the distinction between gift and commodity economies as an organising trope in The Gender of the Gift, using the former to talk about Melanesian social forms and the later Euro-American ones. In doing so, she used the logic of the gift to describe a host of activities that are usually not seen as properly 'economic,' including kinship and ritual.

My question pertains to the relations that compose these concepts. The informal economy is defined largely in opposition to the formal one, giving positive dimensions to a negativity. Your paper offers three examples, in Victorian England, British West Africa and colonial New Guinea. What is the limit of the concept? To what extent does the 'informal economy' concept include non-economic activity? In other words, does it exclude some activity outside its purview? Perhaps everything potentially economic? A related question is how does the distinction between formal and informal economies relate, if at all, to the one between gift and commodity economies?

Alberto Corsín Jiménez and Rane Willerslev's "‘An anthropological concept of the concept’," on the work that concepts do in economic models, might also be of some relevance here.



Justin Shaffner said:


My question pertains to the relations that compose these concepts. The informal economy is defined largely in opposition to the formal one, giving positive dimensions to a negativity. Your paper offers three examples, in Victorian England, British West Africa and colonial New Guinea. What is the limit of the concept? To what extent does the 'informal economy' concept include non-economic activity? In other words, does it exclude some activity outside its purview? Perhaps everything potentially economic? A related question is how does the distinction between formal and informal economies relate, if at all, to the one between gift and commodity economies?

 

 

In the last decade I have published half a dozen book chapters and encyclopedia articles trying to answer these questions and John has referred to some of them in his paper. They go to the heart of the conceptual framework for economic anthropology and I have co-authored a book on that. I think John has presented how and why he uses the term informal economy/sector. But it seems that anthropologists prefer their own meta-discourses to engaging with the fine print of an article. I intend to make specific reference to John's paper soon and I blench at the thought of compressing into a maximum of 4,000 characters the gist of my conceptual arguments. But we have to find a way forward and perhaps I need to grasp the nettle. In the meantime, I don't think John or any other participant in this discussion is going to read Corsin/Willersley, so it would be a good idea for us to be told by Justin what they say that might concern us here.

The concept we are discussing has a history which is narrowly four decades old. Lots has changed in that time. Originally it was coined towards the end of three decades ruled by the Keynesian consensus in which state management of the economy took priority. From being initially conceived of as minor activities in the cracks of a state-made economy, after three decades of neoliberal deregulation and adulation of the "free market" so much of the world economy is unregulated that it seems that the majority of economic transactions are informal in that sense. At first, the idea was to draw attention to invisible activities where the authorities imagined there existed only a void (unemployment). Now the problem is to sort out global phenomena that are so disparate and yet evident. These include tax havens or offshore banking, shadow banking, criminal traffic in drugs and arms, "pirated" copies of everything digital and analog, massive casualization of corporate and public sector employment, housework, do-it-yourself, peasant subsistence, gambling, corruption, the street trades listed by Mayhew...I could go on and on. I have concluded that the heuristic value of the concept is much diminished by this plethora of potential applications. But John was careful to restrict the historical terms of his comparison to a less catholic scenario.

Yes, form is an idea, a rule, and informality is defined dialectically in opposition to the dominant rules of economy c. 1970 which were those of national bureaucracy. As such it says almost nothing about the social principles that organize economic activities deemed to be informal. These include kinship, gender, locality, religion, ethnicity, criminal gangs, political patronage and so on. I have identified four ways that the dialectic may be construed: 1. as division: the world is dvided into complementary moieties like male and female 2. as content: the informal supplies what is unspecified by the rules, as in work to rule, when this content is suspended and everything grinds to a halt 3. as negation, by breaking the rules, that is illegal activities, including criminal abuse of bureaucratic power itself and 4. as residue, that is all the stuff that is left out but has no plausible relationship to the bureaucracy; this last would include perhaps domestic and peasant economies as well as plural jurisdictions which do not assume unitary state laws.

It is even harder to attach this dialectic to the idea of economy, which may be why the World Bank now prefers informality to informal sector or economy.  Economy started out as household budgeting and now is closely associated with markets and money. It is used popularly to imply something out there, the (national) economy, but modern economics regards it as a species of subjectivity. Its scope ranges from how we have all been plundered by the financial system through the growing global shortage of water, minerals and energy to such facts as this one: the West consumes in ice cream, pet food and cosmetics enough to feed, sanitise and educate the billion poorest human beings alive today.

I hardly think that, in face of such confusion, the term non-economic means very much, even though many anthropologists prefer to deal with economic questions, if at all, by rejecting the straw man of homo economicus that was barely plausible when it was invented in the 1880s. Surely this minefield of definition should encourage us to pay attention to specific arguments rather than raise metaphyical issues of ever more specious generality.

As for the gift, that is something else I have flogged to death in recent years, to no avail in anthropological circles, I suspect. Marcel Mauss wrote his classic essay to refute the bourgeois ideological opposition between self-interested markets and altruistic or free gifts. He held that all social transactions, market contracts and gifts, are individual and collective at the same time, both interested and generous in turn. The archaic gift or potlatch was his way of showing allegorically that even in capitalist societies there is an infrastructure of state law, social custom and shared history that Durkheim called the non-contractual element in the contract; and these precedents might sustain an economic revolution from below invovling professional associations, cooperatives and mutual insurance. Ideologists of right and left ignore the plurality of economic principles that coexist in any society in order to deal in extreme and polarized caricatures.

Just as the formal and informal economeis are so inseparable that it doesn't make sense to talk about either as an object sui generis, it is nonsense to talk about commodity and gift economies, even worse to pin this caricature on an idealised contrast between Us and Them, the West and the Rest. This notion, which is the bourgeois ideology that Mauss wrote his essay to refute, owes its predominance in Anglophone anthropology to Levi Strauss, Sahlins and Strathern, each of whom had their own axe to grind in intellectual politics and none of whom was interested in the development questions raised by John in his paper. Surely we know by now that any theory or concept is relative to the specific questions it helps us to answer and these vary across time and space.

Next stop for me is engaging with the paper, but don't let me interfere with the anthropological metaphysics, if that is your bag. This is not a rebuke of Justin, by the way. The last set of questions he posed are right on the ball and elegantly expressed. And I still look forward to the intervention of people with "Melanesian" interests. But I also hope that people who may have a quibble with quite minor aspects of John's paper or would like him to clarify something unclear will not be deterred by all this philosophy.

I thank Keith for absolving us from the task of reading the paper by Jiménez and Willerslev; also for directing our attention to the context in which the informal economy came to light – at the end of the long post-war economic boom in the Western economies and of the intellectual dominance of Keynesianism, and at a time when the ‘problem’ of open ‘unemployment’ in the third world was exercising the international agencies and orthodox economists. This ‘problem’ was perceived because of the application of economic categories (employment/unemployment) from the industrial world to developing countries. Hart’s statement of what now seems obvious (‘the emperor has no clothes’) transformed perceptions almost overnight, to the point where his insight was seized upon by the ILO and other agencies as a panacea for the aforementioned unemployment problem. Except that it was no longer seen simply as a matter of jobs and unemployment but rather one of livelihoods and income (whether adequate or not) and caused at least some economists to revise their models to incorporate such considerations.

It was purely by chance that one of Keith’s earliest subsequent assignments took him to Papua New Guinea in 1972, a country to which the ‘informal sector’ construct was really not very applicable, posing the question of why this was so. In my paper I have worked through Salisbury’s (1960s) writings on the Tolai people of the Gazelle Peninsula, to find the relatively modest evidence of informal monetized economic activity in the (then) most advanced district of the country. But, as Keith points out, a lot has changed since then, both in PNG and in the wider world.

For John (McCreery): the description of ‘hybridity’, as being simply ‘a mixture of traditional and modern’, doesn’t quite get at what I mean. I’m referring, in the economic domain, to responses to economic incentives that do not fit well with the neoclassical ‘maximisation’ assumptions. I referred to ‘the persistence of elements of traditional social behavior and the pursuit of goals determined by traditional values’ in the face of new economic opportunities. My own particular interest is in the theorization of behaviours associated with the transition from subsistence to market exchange. In my paper, I examine the treatment of this subject by Peter Bauer and Richard Salisbury. In other work I am looking at the concept of a kind of ‘affluence’ said to be enjoyed by some subsistence cultivators (the ‘original affluence’ of Marshall Sahlins and the ‘subsistence affluence’ of the economist E K Fisk). Both men applied the concept of affluence to PNG. I’m exploring the implications of these ideas for the particular forms (and limited extent) of informal economic activity occurring in PNG. See http://ips.cap.anu.edu.au/ssgm/events/seminar_details.php?searchter... for an abstract.

From there it’s rather a long step to urban associations of the Chinese (I recommend a visit to the charming World Heritage listed town of Hoi An in central Vietnam to see some examples of their meeting halls) or to the subject of ethnically-based occupational specialization among migrant communities. With regard to the latter, there has been some such specialization in PNG, but more in the formal workforce, and based on differential access to formal education for historical reasons – the lagged spread of colonial administration across the land. In the informal economy there is some specialization in the produce shipped to town markets based on environmental factors, and some evidence of the cornering of middleman functions based on the brute force of particular ethnic groups – but I’ve had limited opportunity to examine the evidence so far.



Keith Hart said:



Justin Shaffner said:


My question pertains to the relations that compose these concepts. The informal economy is defined largely in opposition to the formal one, giving positive dimensions to a negativity. Your paper offers three examples, in Victorian England, British West Africa and colonial New Guinea. What is the limit of the concept? To what extent does the 'informal economy' concept include non-economic activity? In other words, does it exclude some activity outside its purview? Perhaps everything potentially economic? A related question is how does the distinction between formal and informal economies relate, if at all, to the one between gift and commodity economies?

 

 

In the last decade I have published half a dozen book chapters and encyclopedia articles trying to answer these questions and John has referred to some of them in his paper. They go to the heart of the conceptual framework for economic anthropology and I have co-authored a book on that. I think John has presented how and why he uses the term informal economy/sector. But it seems that anthropologists prefer their own meta-discourses to engaging with the fine print of an article. I intend to make specific reference to John's paper soon and I blench at the thought of compressing into a maximum of 4,000 characters the gist of my conceptual arguments. But we have to find a way forward and perhaps I need to grasp the nettle. In the meantime, I don't think John or any other participant in this discussion is going to read Corsin/Willersley, so it would be a good idea for us to be told by Justin what they say that might concern us here.

The concept we are discussing has a history which is narrowly four decades old. Lots has changed in that time. Originally it was coined towards the end of three decades ruled by the Keynesian consensus in which state management of the economy took priority. From being initially conceived of as minor activities in the cracks of a state-made economy, after three decades of neoliberal deregulation and adulation of the "free market" so much of the world economy is unregulated that it seems that the majority of economic transactions are informal in that sense. At first, the idea was to draw attention to invisible activities where the authorities imagined there existed only a void (unemployment). Now the problem is to sort out global phenomena that are so disparate and yet evident. These include tax havens or offshore banking, shadow banking, criminal traffic in drugs and arms, "pirated" copies of everything digital and analog, massive casualization of corporate and public sector employment, housework, do-it-yourself, peasant subsistence, gambling, corruption, the street trades listed by Mayhew...I could go on and on. I have concluded that the heuristic value of the concept is much diminished by this plethora of potential applications. But John was careful to restrict the historical terms of his comparison to a less catholic scenario.

Yes, form is an idea, a rule, and informality is defined dialectically in opposition to the dominant rules of economy c. 1970 which were those of national bureaucracy. As such it says almost nothing about the social principles that organize economic activities deemed to be informal. These include kinship, gender, locality, religion, ethnicity, criminal gangs, political patronage and so on. I have identified four ways that the dialectic may be construed: 1. as division: the world is dvided into complementary moieties like male and female 2. as content: the informal supplies what is unspecified by the rules, as in work to rule, when this content is suspended and everything grinds to a halt 3. as negation, by breaking the rules, that is illegal activities, including criminal abuse of bureaucratic power itself and 4. as residue, that is all the stuff that is left out but has no plausible relationship to the bureaucracy; this last would include perhaps domestic and peasant economies as well as plural jurisdictions which do not assume unitary state laws.

It is even harder to attach this dialectic to the idea of economy, which may be why the World Bank now prefers informality to informal sector or economy.  Economy started out as household budgeting and now is closely associated with markets and money. It is used popularly to imply something out there, the (national) economy, but modern economics regards it as a species of subjectivity. Its scope ranges from how we have all been plundered by the financial system through the growing global shortage of water, minerals and energy to such facts as this one: the West consumes in ice cream, pet food and cosmetics enough to feed, sanitise and educate the billion poorest human beings alive today.

I hardly think that, in face of such confusion, the term non-economic means very much, even though many anthropologists prefer to deal with economic questions, if at all, by rejecting the straw man of homo economicus that was barely plausible when it was invented in the 1880s. Surely this minefield of definition should encourage us to pay attention to specific arguments rather than raise metaphyical issues of ever more specious generality.

As for the gift, that is something else I have flogged to death in recent years, to no avail in anthropological circles, I suspect. Marcel Mauss wrote his classic essay to refute the bourgeois ideological opposition between self-interested markets and altruistic or free gifts. He held that all social transactions, market contracts and gifts, are individual and collective at the same time, both interested and generous in turn. The archaic gift or potlatch was his way of showing allegorically that even in capitalist societies there is an infrastructure of state law, social custom and shared history that Durkheim called the non-contractual element in the contract; and these precedents might sustain an economic revolution from below invovling professional associations, cooperatives and mutual insurance. Ideologists of right and left ignore the plurality of economic principles that coexist in any society in order to deal in extreme and polarized caricatures.

Just as the formal and informal economeis are so inseparable that it doesn't make sense to talk about either as an object sui generis, it is nonsense to talk about commodity and gift economies, even worse to pin this caricature on an idealised contrast between Us and Them, the West and the Rest. This notion, which is the bourgeois ideology that Mauss wrote his essay to refute, owes its predominance in Anglophone anthropology to Levi Strauss, Sahlins and Strathern, each of whom had their own axe to grind in intellectual politics and none of whom was interested in the development questions raised by John in his paper. Surely we know by now that any theory or concept is relative to the specific questions it helps us to answer and these vary across time and space.

Next stop for me is engaging with the paper, but don't let me interfere with the anthropological metaphysics, if that is your bag. This is not a rebuke of Justin, by the way. The last set of questions he posed are right on the ball and elegantly expressed. And I still look forward to the intervention of people with "Melanesian" interests. But I also hope that people who may have a quibble with quite minor aspects of John's paper or would like him to clarify something unclear will not be deterred by all this philosophy.

John and Keith, thanks for the reply. My question was motivated by an attempt to understand how the concept of the informal economy allowed one to identify the ‘same’ sorts of activities in radically different contexts, from Victorian England to colonial New Guinea, the former predominately commodity and the latter gift economy. It is the concept that facilitates the move from one context to another.

For sure, Gregory’s project was not the same as Strathern’s, and I don’t think they necessarily contradict one another. Gregory worked to demonstrate the co-articulation of gifts and commodities in PNG, while Strathern was concerned with affirming the cultural logic of the Melanesian exchange in its own right, and did so under the name of the ‘gift.’ Here, in many ways, she is not far from Mauss.

My question then was, though perhaps poorly formulated, if New Guinea social life constitutes a kind of economy in its own right — what Strathern calls a ‘gift’ economy — how then does this co-articulate with the distinction between formal and informal economy?

This is especially interesting in the case of the Tolai where Salisbury worked, as they had (and still do) their own form of currency, tabu, a kind of shell money that was used for bride price, payment of food from local markets, for settling disputes, initiation, etc.

What the informal and gift economy seem to share as concepts is that both provide a language to describe as ‘economic’ particular activities that were previously not seen as such. They also share a certain ethnographic sensibility in foregrounding what people actual do.

And I'm surprised to hear that foregrounding what anthropologists do with their concepts and descriptions sounds too much like 'philosophy' or 'metaphysics.' I take it as an integral part of doing anthropology.

Justin asks ‘how the concept of the informal economy allowed one to identify the “same” sorts of activities in radically different contexts, from Victorian England to colonial New Guinea’. What these activities have in common, wherever and in whatever era they occur, lies in their transgressing the requirements of ‘form’ as laid down by the norms of the particular society. The bases of organization for such transgressive behaviour include (by Keith’s account) ‘kinship, gender, locality, religion, ethnicity, criminal gangs, political patronage and so on’. My account of the societies described by Hart, Mayhew, Bauer and Salisbury, respectively, provides numerous instances of these ‘social principles’ at work, varying in their relative importance according to circumstances.

That’s not as straightforward as it may sound, however, because required ‘forms’ are fluid, changing as societies themselves change. The cases I examine (one early-independent and two late-colonial states, one ancient polity undergoing industrialization) all had in common the circumstance of rapid social change. The requirements of form may in such circumstances lag behind a changing reality – degrees of uncertainty and arbitrariness may attend the policing or enforcement of ‘form’. The informal thrives in situations of ambiguity, and no doubt Keith would be prepared to extend this maxim globally, to the effects of the deregulatory impulse which followed the eclipse of Keynesianism and the decline of social democracy. Such ambiguity helps to explain the ‘inseparability’ of the formal and informal to which Keith refers, and he appears also to imply that the commodity and the gift economies are similarly inseparable or, perhaps, indistinguishable. Certainly, they appear to be fused in Chris Gregory’s account of PNG, to which you refer.

You ask about the Tolai of the Gazelle in PNG, and their use of a parallel shell-money currency. My reading of the accounts of this currency in operation by Scarlett Epstein and Salisbury does not lead me to link its use with any notion of informality in economic activity. The emerging Tolai informal market economy described by them should be categorized, I believe, in contradistinction to the formal economy of late-colonial New Guinea society, its government, expatriate planters and trading companies and the intermediate class of Chinese traders.  Shell money was used, as you say, for a variety of traditional purposes, including trade in traditional foods among Tolai (whereas trade in the same commodities with non-Tolai was conducted in cash). This circumstance enabled Salisbury to calculate rough equivalences between cash and shell-money values, but his description suggests to me a parallel currency system for certain (relatively minor in the aggregate) forms of market exchange, not the use of a special currency for informal economic transactions. The primary use of tabu currency was for traditional purposes.



Justin Shaffner said:

John and Keith, thanks for the reply. My question was motivated by an attempt to understand how the concept of the informal economy allowed one to identify the ‘same’ sorts of activities in radically different contexts, from Victorian England to colonial New Guinea, the former predominately commodity and the latter gift economy. It is the concept that facilitates the move from one context to another.

For sure, Gregory’s project was not the same as Strathern’s, and I don’t think they necessarily contradict one another. Gregory worked to demonstrate the co-articulation of gifts and commodities in PNG, while Strathern was concerned with affirming the cultural logic of the Melanesian exchange in its own right, and did so under the name of the ‘gift.’ Here, in many ways, she is not far from Mauss.

My question then was, though perhaps poorly formulated, if New Guinea social life constitutes a kind of economy in its own right — what Strathern calls a ‘gift’ economy — how then does this co-articulate with the distinction between formal and informal economy?

This is especially interesting in the case of the Tolai where Salisbury worked, as they had (and still do) their own form of currency, tabu, a kind of shell money that was used for bride price, payment of food from local markets, for settling disputes, initiation, etc.

What the informal and gift economy seem to share as concepts is that both provide a language to describe as ‘economic’ particular activities that were previously not seen as such. They also share a certain ethnographic sensibility in foregrounding what people actual do.

And I'm surprised to hear that foregrounding what anthropologists do with their concepts and descriptions sounds too much like 'philosophy' or 'metaphysics.' I take it as an integral part of doing anthropology.

Thanks John for a great paper and discussion and thanks to Justin for chairing and for bringing to mind the following reply/post/response.

I wanted to pick up on the idea of the "foregrounding" of the negative. In a response to a collection of articles discussing her book Marginal Gains, Jane Guyer explains that the book shows the huge amount of effort it takes to keep a lid on prices because "only tautologically, and by excluding many obvious elements, can equivalence be seen as reflecting “demand” and “supply" (African Studies Review, Volume 50, Number 2, September 2007: 187).

She later explains: "Verran and Berry (this issue) go straight to the profound epistemological question: Are we still looking—in some form or another—for invariants? If so, in what form? Heretofore unrecognized cultural principles? Enduring historical patterns? Pervasive relational algorithms? If we still have a homing instinct for coherence, is this just a function of the inertias of our founding training in systematicity, or can other philosophical assumptions support coherence and order and take them creatively into new domains of life and thought? If, alternatively, we embrace disorder, where can social scientific work optimally focus? Even if an answer in the form of an abstract formulation to these questions is not explicitly offered, all empirical expositions still imply resolutions simply by virtue of the point at which we rest content and look no further" (ibid: 188).

Keith, Jane Guyer and others were involved in a special issue of Anthropological theory (2010, 10, 36) that developed some interesting ideas revolving around numbers. This sort of work makes me think of the guy that can remember Pi to the most number of digits. The way he does it is by imagining a landscape and the different elements in the landscape represent different sets of numbers in sequence. There is a time dimension and different things happen in the landscape at different times so that he knows which set of numbers should come next. For example he mentions a thunderstorm at one point and a crack of lightening. He says that he gets different sensations when he thinks of the sequences of numbers, so the lightening cracks and he's worried and then something else happens and he's at ease again (so for example (not his) it must be eight next). My gran was always more satisfied if someone's birthday fell on a date that had lots of factors and I can understand that sensation of being more at ease with one number than another whilst at the same time wanting to seek out, explore and mobilise those things that seem disorderly and invariant. 

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